New Yorkers pay among the highest residential electric rates in the continental United States. And yet, consumers have no one to advocate for lower rates. On the other hand, utilities have plenty of lawyers and experts able to “prove” the need for higher rates.
The saddest thing about this arrangement is that the customers end up paying utilities to push for higher rates.
That’s right. New Yorkers actually pay the expenses utilities incur justifying rate increases and advancing utility interests in regulatory matters. Those costs are included in the rates the utilities charge. Ratepayers are paying to propose and defend increases in their own bills.
Of the utility companies that serve most Western New Yorkers, National Grid charged its ratepayers an average of more than $4.5 million a year to represent the company’s interests before the state Public Service Commission, National Fuel Gas passed on nearly $1 million annually and New York State Electric & Gas billed its customers nearly $370,000 per year.
This situation was underscored in AARP’s report, “David v. Goliath: Why consumers are losing New York’s utility game.” New York has no independent advocate with the power to seek judicial review of a regulatory agency decision.
Legislators should make that happen and the governor, whose Moreland Commission addressed this very deficiency in its own report, should sign on. Unsurprisingly, telecommunications and utilities oppose this effort.
The Assembly is on board with its recently approved 2014-15 budget. It proposes a state Office of Utility Consumer Advocate to provide residential consumers with an independent voice to represent their interests during state and federal regulatory proceedings.
The Senate budget resolution merely states the need to look at the merits of considering this office. Bronx Democratic Sen. Jeff Klein, co-leader of the chamber with a coalition of Republicans, has publicly stated the need for a consumer advocate, but no one has heard any such statement from Sen. Dean Skelos, head of the Republican conference.
The advocacy office would cost an estimated $500,000 and could easily pay for itself and then some. Forty states and the District of Columbia have consumer advocates, resulting in millions of dollars in savings for ratepayers. Connecticut reported approximately $730 million in direct savings to ratepayers in the 2012 fiscal year, on a $3 million budget.
There is always the threat in New York that a $500,000 expense this year will morph into $5 million or $10 million in a few years, and not show the expected results. To guard against that, the law should have an expiration date, say in five years. If the office is saving consumers much more than it costs, then the Legislature and governor should extend it. If not, let it expire.
Do nothing, however, and ratepayers will continue to foot the bill for utility companies arguing for higher rates.